Equity markets dull; US regional Fed surveys blah; Canada data tails off; China export anecdote weak; China stimulus effect strong; Aussie banks ready to downsize; UST 10yr 2.55%; oil and gold soft; NZ$1 = 67.6 USc; TWI-5 = 72.1

Equity markets dull; US regional Fed surveys blah; Canada data tails off; China export anecdote weak; China stimulus effect strong; Aussie banks ready to downsize; UST 10yr 2.55%; oil and gold soft; NZ$1 = 67.6 USc; TWI-5 = 72.1

Here's our summary of key events overnight that affect New Zealand, with little for markets to get excited about.

Firstly, equity markets in New York are marking time with a soft bias. The S&P500 is down -0.2% in the mid afternoon session. More big banks are reporting earnings and these latest ones aren't doing as well. European markets closed just on the positive side. And in late trading in Asia, the optimism earlier in the day yesterday vanished in Hong Kong and Shanghai, with both closing with -0.3% losses on the day. Tokyo however was the standout, holding on to its gains and closing up +1.4%. (The NZX also had a very good day, up +0.8% in stark contrast to the unchanged ASX.)

In the US, another of the regional Fed surveys is out, this time for the New York region and its outlook for factories there stumbled in April even as the index of current conditions stayed up. It is another signal of growing headwinds in the American economy and comes after similar faltering in the Philadelphia and Dallas regions. None of them have positive new orders growth.

In Canada, the just-released data on March housing sales remained downbeat in March after the big fall in February. Home sales are now near some of their lowest levels recorded in the last six years. Volumes are down -4.6% year-on-year. Prices are down -1.8%. Analysts had expected a better result.

And the downbeat Canadian attitudes extend into business. A Bank of Canada survey shows business sentiment shifted from a strongly positive level in the winter survey and is now slightly negative, as business sentiment weakens. And another survey of bank loan officers is not positive about household mortgage demand although the latest result is not as negative as in the previous survey.

In China, a telling anecdote has emerged. For more than sixty years the Canton Trade Fair has showcased China's export prowess. But this year things are not well; organisers report falling demand for show booths and are glum about what this means for their export trade ahead.

So at home, infrastructure stimulus is important. And it seems to be working. Sales of excavation equipment in China are booming. The country’s 25 leading excavator makers sold 44,278 units in March, the highest monthly sales on record and was almost +16% more than in March 2018 - and that followed an almost +70% leap in February.

In Australia, banks are under pressure on 'conduct and culture'. Each of the majors are very large organisations with as many as 40,000 employees each. Assuring 'conduct and culture' is up to standard everywhere may not be possible, so banks are moving to rapidly downsize, replacing thousands of positions with automated tech alternatives, ones their directors can control more reliably (and therefore avoid going to jail). All of them are on this shrinkage path; Hayne just sped it up. ANZ is the latest to announce cuts, which may be as many as 12,000 jobs.

The UST 10yr yield has held on to its new firmer level at 2.55%. Their 2-10 curve is little-changed however at +16 bps and their negative 1-5 curve is still at -6 bps. The Aussie Govt 10yr slipped a bit after Friday's strong gains, today down -2 bps at 1.95%, the China Govt 10yr is still rising, up +5 bps at 3.38%, while the NZ Govt 10 yr is at 2.08% and up +4 bps.

Gold is marginally softer at US$1,288/oz, down -US$2.

US oil prices are also little-changed although marginally softer, still just on US$63.50/bbl while the Brent benchmark is at US$71.50/bbl.

The Kiwi dollar will start today little-changed at 67.6 USc. On the cross rates we are softer at 94.2 AUc. Against the euro we are unchanged at 59.8 euro cents. That leaves the TWI-5 at 72.1.

Bitcoin is at US$5,059 and little-changed overnight. This rate is charted in the exchange rate set below.

The easiest place to stay up with event risk today is by following our Economic Calendar here ».

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USD 
NZD
End of day UTC
Source: CoinDesk

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2 Comments

It can't be that all the comments were filtered out...

Correct. It isn't that.